UNC names investment head

King to manage University's $1.1B endowment

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Officials have found a new chief to take the helm at UNC Management Company Inc., a private organization that pilots the University's $1.1 billion endowment.

Jonathon King, associate vice president for investments at Dartmouth College, will begin serving as president and chief executive officer of the management company starting Jan. 1, 2005, officials announced late Friday.

"I was at a point that I was looking for a new challenge," King said. "I hold UNC in the highest regard. It is obviously one of the greatest state universities in the country."

The appointment marks the first change in command at the company since it formed two years ago to advise officials on how to invest the University's endowment.

The endowment, which provides a stable source of funding at UNC to support scholarships, professorships, departments and academic programs. In 2002, that amounted to $24.7 million.

Mark Yusko resigned from his post as the chief executive officer of the company last June after serving as the University's chief investment officer for six years. During his tenure he centralized the University's investments and crafted one of the nation's preeminent investment models for higher education.

But a split vision for the University's long-term investments pushed Yusko to pursue a career in the private sector and officials to begin the search for a new president and CEO. Yusko wanted the University to manage outside investments, but the investment fund board held that the company should only manage money within the UNC system.

Officials now have found a candidate to sign on to their investment philosophy.

"Managing outside money is no longer an option," said Tim Burnett, chairman of the UNC Management Company's Board of Directors. "All of that was covered. ... The people at the UNC Management Company are going to manage the assets of the UNC system."

When Yusko stepped down from the post, more than 10 universities throughout the nation also were searching for chief investment officers. But Yusko left behind a list of people whom he considered qualified enough to manage the University's endowment.

A nationwide search led officials to choose King from that list.

"Dartmouth is an Ivy League school, and Jonathon has been around the investment business for a long time," Yusko said. "I think he is a good addition and will do a good job."

Because King will report directly to the management company's board of directors and will not serve as a University employee, both his contract and compensation records are not public documents.

Yusko earned a base salary of $170,000 from the University through the management company, but according to IRS filings, he earned $341,444 in 2002.

King has worked at Dartmouth for the past 16 years, serving as the chief investment officer of the Dartmouth College endowment since 1999.

Dartmouth's endowment was valued at $2.46 billion last June, up from $593 million in 1990. Dartmouth's five- and 10-year endowment investment results have ranked in the top 5 percent of college and university return during the past decade, according to University officials.

Dartmouth's endowment was ranked 20th and UNC-Chapel Hill's ranked 36th among university endowments in 2003.

But during that same year, Dartmouth's endowment dropped 3 percent, while the University's marked a 2.5 percent increase, according to the National Association for College and University Business Officers.

King said he sees more significance in the similarities between the endowments than in their differences.

"The object is to manage a portfolio in the most effective way for the highest return," he said. "Whether that is done at a state university or a private university, I don't think there is any difference in the approach or the outcome."

Media reports published during King's tenure at Dartmouth show that some groups considered the college's investments in companies including the tobacco giant Altria socially irresponsible.

UNC-CH's regulations are fairly simplistic and aren't restricted on the basis of social responsibility, Yusko said.

During the past year, more than 50 percent of the University's endowment has been invested in hedge funds, which are not registered with the U.S. Securities and Exchange Commission and are therefore subject to relatively little regulation. Peer universities invest an average of 20 percent of their endowments in these funds, according to NACUBO.

This number is constantly evaluated as officials review the portfolio.

"Whether we stay where we are or lighten up, that is a decision to be made by Jon King and the investment board," Burnett said.

King began working as an associate investment officer at the Dartmouth Investment Office in June 1988 after working in the private sector. He received a master's of business administration from the Tuck School of Business at Dartmouth in 1983.

Contact the University Editor at udesk@unc.edu.

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